If you boast of never having a business that failed, most investors will assume that you have never tried anything innovative or you simply haven’t faced the truth. According to many reports, about half of startups fail in the first five years. What investors look for is that you wear your failure as a badge of courage and can talk positively about what you have learned.
In fact, the willingness and determination to overcome the risks of a new venture is one of the first criteria that defines an entrepreneur. Close behind that is the ability to rebound from setbacks or failures, extract lessons learned and forge ahead with renewed determination and confidence. Here are some specific recommendations to keep you on the right track:
Failure is not the end, but the start of a new beginning. Generations of successful entrepreneurs, including Thomas Edison, categorized every failure as an experiment, and each one told him successfully what didn’t work. Despite a thousand light-bulb filaments that failed, he is remembered as one of the most success entrepreneurs of the century.
Don’t expect startup failures not to hurt. Every human grieves over a loss. Some never recover their confidence, and others continue to fall back on excuses, such as “I was a victim of the recession,” or “My investors forced me to make some bad decisions.” After a few months, the best entrepreneurs are back in the game with a better plan.
Startup failures are not personal condemnations. Economic condition changes and high investor expectations are real but normal challenges facing every startup. You have not been singled out for testing, and being overrun does not indicate a character flaw preventing you from being a successful entrepreneur.
See competitors as big opportunities, not monsters to fear. Don’t forget to ask how you are better, and don’t allow yourself to be counted out. Competitors may have scale and size on their side, but they usually aren’t nimble and tuned in to the latest trends. Every entrepreneur has strengths, but too many ignore them and fear their weaknesses.
Fall back on your values for strength and direction. Successful entrepreneurs are comfortable doing business in a changing world. They use their moral compass to get them back on track after a setback and keep them pointed in the right direction. Investors, customers and partners follow entrepreneurs who are honest and caring.
A successful rebound requires learning from each iteration. The biggest mistake of all is doing the same thing over and over again and expecting a different outcome. Here are some key elements to look for and plan to capitalize on for the next iteration:
- A deeper level of understanding of the market. Now you know how the market has changed, what new customers are not looking for or where competitors are not so vulnerable. Write these down, and build a new plan which capitalizes on every insight.
- New levels of business acumen for startups. Building a startup is not like running a mature business. Now you know some key parameters of cash flow, marketing metrics and investor expectations. Technology has changed, as well as tax regulations and social implications.
- You have more relationships, and know how to build new ones. Strong relationships lead to successful businesses. These include your relationships with industry players, investors, distribution channels and your own team. Use the ones that work, and build the new ones you need to make the next iteration more positive.
For successful entrepreneurs, every failure makes them stronger in spirit and capability, not weaker. It’s fair to be humbled by failure, such that you become a better listener, more supportive and more decisive in the face of business challenges. Don’t let the destination be your only measure of satisfaction. Entrepreneurs who enjoy the journey are always winners.
*** First published on Entrepreneur.com on 10/16/2015 ***